Rex Tillerson to take the stand in N.Y.
And there’s a good chance his emails will be up for debate once again.
Prosecutors in People of the State of New York v. Exxon Mobil Corp. claim the company misled shareholders over how climate risks were accounted for in business plans laid out in multiple investor reports approved by Tillerson.
Sources familiar with the case say New York Attorney General Letitia James’ lawyers may also bring Tillerson’s private email account to the fore during his time on the stand to argue that the absence of deleted emails had an adverse effect on litigation.
Between millions of pages of documents pulled for discovery, the Democratic attorney general found Tillerson once had a private email account dubbed “Wayne Tracker” while he was leading Exxon, but it was never flagged for litigation because of the alternative name. The oil giant said it failed to preserve Wayne Tracker emails prior to Aug. 18, 2015, because they were automatically deleted to make space for other documents.
According to the prosecutors’ pretrial memorandum, Exxon revealed in depositions that it chose not to include the account to see if “incidental references to ‘Wayne Tracker’ in documents that were produced would provide ‘an interesting test of whether the Attorney General’s office is reading the documents.'”
Exxon denied the account was used to hide facts from shareholders, but the attorney general questioned the account’s anonymity and the fact that some of the scrubbed emails were from 2014, a year of “key events” in James’ case.
Justice Barry Ostrager denied New York’s request to punish Exxon for failing to preserve the emails. The presiding judge said at a pretrial conference that he was satisfied with Exxon’s explanation of the email account and there was “no harm, no foul.”
But because Ostrager dismissed the request without prejudice, New York has another chance to bring up the emails again while Tillerson is in court.
At issue in the lawsuit is Exxon’s use of “proxy costs,” theoretical carbon prices that help plan oil and gas investments in the face of potential climate change regulations. James says Exxon gave investors a conservative proxy cost estimate but actually used a much lower cost to evaluate investments that could potentially be risky in a low-carbon future.
Exxon says the two sets of costs were legitimate and used for different purposes, and that the company did not lie to shareholders in its reports.
New York’s arguments also turn on Tillerson’s public statements to shareholders that the company has always prioritized longevity and safety of long-term investments. But prosecutors claim the company was smudging the accounting to make risky investments seem more profitable than they were.
“We have for many years included a price of carbon in our outlook. We don’t know how else to model what future policy impacts might be,” Tillerson told investors at a 2016 shareholders meeting. “We choose to put it in as a cost. So we have accommodated that uncertainty in the future, and everything gets tested against it.”
The lawsuit, which stems from an investigation brought by former New York Attorney General Eric Schneiderman (D), is now in the second week of testimony.
Ostrager showed little patience for what he called the “banter between lawyers” over what may or may not be submitted into evidence from the millions of pages culled from discovery.
After many years of paperwork and investigation in the case, he didn’t mince words for prosecutors, asking them Friday to get to the point with their next witness and avoid more “agonizing repetitious questioning.”
Ostrager showed frustration Friday when the prosecutors didn’t have another witness ready when Exxon unexpectedly conducted a minuteslong cross-examination.
“We’ll do whatever you want to do for the rest of the afternoon — including nothing,” he said. “But going forward, if you don’t have a witness ready to go, you rest.”